In today’s Wall Street Journal, Toys R Us announced they are opening 350 temporary stores in traditional shopping malls and other locations to take advantage of the holiday season. This strategy is borne out of two market changes:
- KB Toys, traditionally a mall-only toy retailer, going out of business
- Sears expanding their toy department to help grab share from the KB Toys deficit
Holiday sales were down 3.4% last year for Toys R Us. Anticipating similar results for the 2009 holiday season, the national toy retailer realized they could not rely on the same approach to reach customers and drive sales.
Toys R Us is leveraging three key areas:
- Inexpensive rents – With retail sales down and retailers going out of business, there is excess capacity in shopping malls.
- Lower pricing – Higher rents were baked into KB Toys’ pricing (so much that they weren’t competitive). Since rents are lower, TRU can keep pricing on par with freestanding stores.
- Convenience – The convenience of a mall location should attract people who are already shopping versus having to go to another location.
Toys R Us stopped looking at their business the same way.
You should to and see where opportunities might exist to change how you do business. There has never been a better time to do it.